Fox Corp. has put increasing amounts of money behind news and sports in recent years. But that doesn’t mean the company is completely free of drama.
A landmark $787.5 million settlement made Tuesday between Fox and the voting-technology company Dominion Voting Systems does not end what is likely to be a period of tumult for the owner of Fox News Channel and the Fox broadcasting network. The payment to Dominion to keep an explosive investigation into how Fox News disseminated conspiracy theories related to the 2020 presidential election out of the public sphere does nothing to alleviate another wave of scrutiny likely to come from another, similar lawsuit.
Smartmatic, another ballot technology concern, filed a $2.7 billion defamation lawsuit against Fox News in February of 2021, alleging that the outlet knowingly made dozens of inaccurate and defamatory statements about the company. In February of this year, New York Supreme Court gave the case — which also names Maria Bartiromo, Lou Dobbs and Rudy Giuliani as defendants — permission to move forward. If Fox paid $787.5 million to Dominion, which had been seeking $1.6 billion, approximately half of the company’s target, what might Fox pay to make the Smartmatic matter go away? To be sure, the Smartmatic case would have a different judge and play out in a different court, and Fox News did air segments correcting the record.
Smartmatic seems poised to move forward on the matter. “Dominion’s litigation exposed some of the misconduct and damage caused by Fox’s disinformation campaign. Smartmatic will expose the rest,” said J. Erik Connolly, an attorney representing Smartmatic in its suit against Fox, in a statement. “Smartmatic remains committed to clearing its name, recouping the significant damage done to the company, and holding Fox accountable for undermining democracy.”
Wall Street is curious about next steps. “Naturally investors might have questions as to what the Dominion settlement means for the ongoing $2.7 billion Smartmatic USA Corp. case filed in Feb. 2021.” said Robert Fishman, an analyst with MoffettNathanson, in Wednesday research note. “We will have to wait for any additional comments from Fox although we do not think the timing of that court case is
imminent.”
Fox had $4 billion in cash available to it as of December, 2022, and “we expect Fox to pay the settlement during the quarter,” Fishman said.
Shares of Fox Corp. Class A shares were off 2.47%, or 84 cents a share, in early trading Wednesday.
Dominion claimed victory after the settlement was announced, with CEO John Poulos praising the result. “Fox has admitted to telling lies about Dominion that caused enormous damage to my company, our employees, and our customers. Nothing can ever make up for that,” he said Tuesday. “Throughout this process, we have sought accountability and believe the evidence brought to light through this case underscores the consequences of spreading and endorsing lies.”
Fox has not admitted that it erred. “We are pleased to have reached a settlement of our dispute with Dominion Voting Systems. We acknowledge the Court’s rulings finding certain claims about Dominion to be false, This settlement reflects Fox’s continued commitment to the highest journalistic standards. We are hopeful that our decision to resolve this dispute with Dominion amicably, instead of the acrimony of a divisive trial, allows the country to move forward from these issues.”
Will the decision affect the economics of Fox News, which are driven largely by significant distribution fees collected from cable and satellite distributors like Comcast, Charter and DirecTV? Fox is not beholden to discuss the decision on any of its Fox News programs, according to a person familiar with the matter, and is not required to offer any kind of on-air correction or retraction.
“It isn’t clear there has been much, if any, impact of these lawsuits on Fox News’ viewership and
business,” said Fishman. “Similar to the other cable news networks, Fox News’ viewership is down over the past quarter compared to last year because of the spike in viewers related to the initial Russia invasion
of Ukraine in 2022. Looking back further, after a significant spike in 2020, Fox News has remained relatively stable, especially compared to CNN and MSNBC.”
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